‘Buying Tata products on super app to fetch benefits’

Tata Consumer Products was created this year with the merger of Tata Global Beverages and Tata Chemicals. It has announced plans to become a broader FMCG player. Managing Director and Chief Executive SUNIL D’SOUZA tells Pavan Lall the company will use a bolt-on engine to reach deep rural markets. Edited excerpts:

How is the merger’s integration going?

There are three or four parts to it. The organisational structure was approved in May. In terms of back end, one round of combining on warehouses, freight manufacturing, and third-party logistics is some 30 days off from final print and then we start executing. On the front end, it was July when we integrated the front end and it was two disparate systems coming together, which was the singlemost important part of unlocking synergies and growth.

We will have 2-3 per cent synergies and half from revenue and half from cost. The revenue piece will kick in when we get a multi-category sales and distribution system, which will double our direct reach in 12 months and double the numeric reach in 36 months.

How will you manage the prohibitive costs of national distribution?

We have a wide distribution with tea and salt. But we have got to change the execution capability of the system and move from passive to more active, hence the target of 2x direct reach. By de-layering the system and optimising the backend, we think we can take at least 100 basis points off our cost, and then expand deeper into geographies and look at a bolt-on system to reach deep rural. We are adding another piece in S&D, which will get us there in around nine months.

There’s a buzz of a Tata super app to serve all consumer products for the group...

I can’t share details but we will be part of that app. We are also going to play with digital commerce on the platforms of Amazon, Flipkart, and so on.

There will be extra benefits of getting on the Tata super app for anyone who is buying anything to do with the group and that will be the big draw.

You mention becoming a full-scale FMCG player... what will that look like?

We will continue to focus on our core business, which has ample scope for tea and salt — to getting unbranded to branded and then growing market share within branded. We have to get our S&D and the innovation pipeline right to drive this. Then we have some fledgling brands to scale up. We will move into adjacencies to food and beverage and then larger FMCG segments.

How did lockdown affect you?

Initially, no one was clear on how to move. Tea gardens stopped plucking tea. The first flush went waste. Now, rules are clear but sporadic shutdowns are disrupting demand and supply. What worked for us was that all consumers needed our products (tea and salt). We also leapfrogged digitally and did a lot of tie-ups.